Many seniors are in a situation where they do not have the income or savings to pay for personal care, for home modifications to enable aging in place, or for long term care insurance. However, they do have financial resources tied up in their home ownership. For some of these seniors, a reverse mortgage is a good option. That said, every family’s situation is unique, and in some cases, a reverse mortgage is not the best option. Following is an exploration of varying scenarios and why different families might opt for or against the use of a reverse mortgage.
Single Seniors in Fair Health
Reverse mortgages are a good option, as the elderly individual does not require immediate care. Many seniors in this situation will continue to live independently in their home for some years. And they can use the proceeds from a reverse mortgage to buy long term care insurance and / or make modifications to their home. This, in turn, makes the home safer and more accessible, which can prolong or allow them to age at home indefinitely.
Single Seniors in Need of Care
If the family can provide enough care to enable the individual to remain living in their home or the proceeds from a reverse mortgage can pay for in-home care or adult day care, then a reverse mortgage is a viable option. However, if care cannot be provided at home and the senior’s health will require them to move into assisted living or a skilled nursing home in the near future, then a reverse mortgage might not be the best option. This is because the rules that govern reverse mortgages require that a home be sold if the owner lives outside the home for 12 continuous months. Thus, selling or renting the home is a better option.
Married Seniors in Fair Health
Reverse mortgages are a good option when neither senior requires immediate care and at least one of the spouses will be living in their home for some years. Couples in this situation will often use the proceeds to buy long term care insurance or make home accessibility modifications in anticipation of a future disability. Some individuals are concerned that if they live in the home for many years and continue to borrow against the home’s value, their loan may exceed the value of the home. This is an unwarranted concern because the government assumes this risk and seniors will never owe more than their home’s value.value.
Married Seniors with One Spouse in Need of Care
A common reason that seniors seek reverse mortgages is when one spouse of a married couple requires care. A spouse in poor health may be required to move into a skilled nursing or assisted living community, and the family requires resources to pay for that care. Couples include both partners on the reverse mortgage agreement. Should the spouse receiving care pass away, the remaining spouse continues to live in the home. Should the spouse in the home die first, the rules allow one year for the home to be sold. The loan is then repaid, and the remaining resources from the home sale can pay for the surviving senior’s ongoing care.
Married Seniors with Both Spouses in Need of Care
Reverse mortgages are not the best option for married couples when both spouses require care. This is because it is likely that both seniors will need to move from the home and enter assisted living or skilled nursing communities in the near future. Reverse mortgages become due when the last borrower moves from the home or passes away. Renting or selling the home may be a better option. However, if the proceeds from a reverse mortgage can be used to pay for in-home care that enables the seniors to continue living comfortably at home, then a reverse mortgage is still an option.
Content provided by PayingforSeniorCare.com
